Correlation Between Direxion Daily and Virtus Dfa
Can any of the company-specific risk be diversified away by investing in both Direxion Daily and Virtus Dfa at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Direxion Daily and Virtus Dfa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direxion Daily Mid and Virtus Dfa 2040, you can compare the effects of market volatilities on Direxion Daily and Virtus Dfa and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Direxion Daily with a short position of Virtus Dfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direxion Daily and Virtus Dfa.
Diversification Opportunities for Direxion Daily and Virtus Dfa
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Direxion and Virtus is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Direxion Daily Mid and Virtus Dfa 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dfa 2040 and Direxion Daily is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Direxion Daily Mid are associated (or correlated) with Virtus Dfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dfa 2040 has no effect on the direction of Direxion Daily i.e., Direxion Daily and Virtus Dfa go up and down completely randomly.
Pair Corralation between Direxion Daily and Virtus Dfa
Given the investment horizon of 90 days Direxion Daily Mid is expected to generate 7.52 times more return on investment than Virtus Dfa. However, Direxion Daily is 7.52 times more volatile than Virtus Dfa 2040. It trades about 0.32 of its potential returns per unit of risk. Virtus Dfa 2040 is currently generating about 0.35 per unit of risk. If you would invest 5,385 in Direxion Daily Mid on September 3, 2024 and sell it today you would earn a total of 1,347 from holding Direxion Daily Mid or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direxion Daily Mid vs. Virtus Dfa 2040
Performance |
| Timeline |
| Direxion Daily Mid |
| Virtus Dfa 2040 |
Direxion Daily and Virtus Dfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direxion Daily and Virtus Dfa
The main advantage of trading using opposite Direxion Daily and Virtus Dfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direxion Daily position performs unexpectedly, Virtus Dfa can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Virtus Dfa will offset losses from the drop in Virtus Dfa's long position.| Direxion Daily vs. Direxion Daily Retail | Direxion Daily vs. Direxion Daily Industrials | Direxion Daily vs. Direxion Daily Transportation | Direxion Daily vs. Direxion Daily FTSE |
| Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Funds American | Virtus Dfa vs. American Balanced | Virtus Dfa vs. American Balanced Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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